Hotel fined for post-Sept. 11 price gouging

NEW YORK, New York (CNN) --A Long Island hotel accused of ratcheting up prices more than 187 percent following September 11 will refund customers and pay a $9,500 fine, a hotel manager said Wednesday.

In the days after hijacked airliners struck two World Trade Center tower, the Days Inn in Hicksville, New York, charged stranded air travelers and victims' family members up to $399 a night -- up from the posted rate of $139 -- the state attorney general's office said.

New York's anti-price gouging law prohibits "unconscionably excessive" prices of essential consumer goods during a state of emergency.

The clerks, unaware of the terrorist attacks on the morning of September 11, overcharged "two or three" customers $50, according to Gerald Lynch. The hotel mailed refund checks that same day, as soon as it "understood the magnitude of the situation," Lynch said.

"We just wanted to get the situation behind us," he said, explaining the hotel's decision to pay the state-imposed fines. One of the employees still works at the Days Inn while the other has left for reasons unrelated to the investigation, said Lynch.

But Christine Pritchard, a spokeswoman for the attorney general's office, called Lynch's claims "disingenuous" and "highly unbelievable." Documents subpoenaed from the hotel's records and the hotel owner's sworn testimony contradict Lynch's statements, she said.

The hotel's owner, Ray Cheung admitted in a deposition that he spoke regularly with hotel clerks on the morning of the attacks and was aware higher rates were being charged, said Assistant Attorney General Juan Merchan.

Instead of two or three people receiving refunds of $50 each, Merchan said, hotel documents show that 12 people received restitution totaling $1,500.

Moreover, Merchan said none of the refunds were mailed until Cheung realized he was being investigated -- well after September 11.

Cheung was said to be on vacation and unavailable for comment on Wednesday.